Facts.

Manuel Barbosa supervised 8 workers at Impco Technologies. After receiving complaints of missing overtime hours from some of the employees he supervised, Barbosa thought he too was owed missing overtime. Barbosa informed the payroll administrator and his supervisor about the missing overtime and that maybe the newly installed time clock was malfunctioning and his supervisor who approved the overtime. The payroll administrator later conducted an investigation by examining the time cards and surveillance tapes and determined that no overtime had actually been due. Barbosa was then terminated for allegedly falsifying time records.

Court's Ruiling.

In Barbosa, the Appellate Court held that although at will employees can be terminated for any reason, or no reason at all, an employee cannot be fired for an illegal reason (e.g., where the termination violates a fundamental public policy such as discrimination). Applying this philosophy, the court explained that "the duty to pay overtime wages is a well-established fundamental public policy affecting the broad public interest." The Appellate Court concluded that when an employer terminates an employee for exercising his right to overtime wages, the employee will have a viable cause of action for wrongful termination. But what if the employee was not entitled to overtime wages? The Appellate Court ruled that when an employee makes a claim for overtime out of a “good faith but mistaken belief” the employee is protected from retaliation and termination even if the employer later discovers the employee was wrong. According to the Appellate Court, "Any other conclusion would open the door to employee intimidation and chill the exercise of statutory rights."

Conclusion.

Employees should be aware that claims for unpaid wages, and complaints for alleged violations of the law, should be made not only in "good faith," but also under a "reasonable belief."

Employers must be aware that an employee may bring a successful wrongful termination claim if the employer terminates an employee after the employer makes a false claim made in good faith, reports "reasonably based suspicion" of illegal activity even if none is later discovered, or claims a violation of the Labor Code even if none was in fact made. As long as the employee makes a complaint or claim for statutory rights in good faith, the employee cannot be fired in retaliation for making a claim in good faith based on a reasonable belief.

If presented with a complaint, or claim, California employers should investigate the matter thoroughly (gather documents and talk to witnesses) and where appropriate take corrective measures. If the complaint turns out to be unfounded, employers should not retaliate against the employee with disciplinary action or termination unless the employer's investigation proves the employee was purposely lying. If there is the slightest possibility that the employee presented his claim, or demand, in good-faith the employer would be wise to let it go. However, if the employee was intentionally trying to perpetrate a fraud (records time not worked, punches in an absent co-worker, or engages in other fraudulent acts) discipline including termination may be an appropriate response.